BMC offers flexible plan for licensing agreements

Application management vendor BMC Software Inc. has introduced a price structure that simplifies the buying process for customers who manage distributed systems and have to plan their expenditures over the long term, company officials said.

BMC still allows customers to pay for products based on processing capacity— measured in millions of instructions per second— as software is commonly priced for mainframes. But the Value License Agreement (VLA) option is intended to fit the needs of users buying BMC products for the Unix and Microsoft Corp. Windows NT-based distributed computing environments.

Many of the changes incorporated into the new VLA price structure originated in requests from government customers, particularly those who are migrating to client/server environments or planning to switch from Unix to Windows NT, said Somesh K. Singh, director of market and business analysis for BMC.

Rather than pay for licenses based on the computers' capacity, VLA customers can pay based on the number of computers they have, which is easier to calculate in the distributed environment, BMC said. The customer does not need to track which kind of systems they have, only the total number of units.

So BMC customers can migrate their management tools from one platform to the other without paying a penalty, according to BMC. Similarly, within one environment, a customer can move BMC software from one computer to another without additional costs.

Steve Foote, senior vice president of Hurwitz Group Inc., Framingham, Mass., said BMC's previous price structure was "completely unmanageable," especially at a company that relies heavily on telesales.

"VLA is simple and more predictable," Foote said. "Customers are saying, 'Help me get to a credible number and make it more predictable.' "

VLA also makes it easier to calculate maintenance costs, which under the old system were based on the list price in the year the maintenance is performed. Price fluctuations made it all but impossible to budget for those costs, Foote said. That is a major consideration for any organization that spends hundreds of millions of dollars on software annually, he added.

The approach is significant for BMC, which has done very well and is looking to continue to grow in the systems management/application management arena, said John McConnell, president of the consulting company McConnell Associates Inc., Boulder, Colo.

Pricing the management software is really difficult, McConnell said, so vendors are trying to come up with licenses based on things such as the number of sites or desktops.

"People keep trying different approaches," McConnell said. "It will be up to the market to decide whether this is vendor greed or user parsimony. This is just another way of playing out that dance."